Nasdaq 100 And PHLX Semiconductor Index Lead The Way Higher On Higher Volume; Leading Stocks Are Setting Up And/Or Breaking Out Everywhere

May 2, 2008

COMMENTARY WILL BE SHORT AS MY SURF SESSION WAS EXTREMELY LONG AND TIRING.

I was impressed by today’s stock market session, especially when it came to leading stocks, tech stocks, and even more specifically semiconductor stocks. It was amazing to get a rally in such high-tech group of stocks. What made today’s rally even better was that volume increased on the Nasdaq and was above the 50 day volume average for the fifth time in the past few weeks. This was the fourth time it was a big up day with volume above average. And even though the NYSE has only had twenty-nine straight days without volume being above average, it is at least in an uptrend and that with low volume is OK with more, for now.

A lot of people are worried about the market being right at resistance and being oversold since our lows. You know what, that is fair, I will agree with that. We do need to be aware that we are running into resistance, we are overbought, and the volume has been close to pathetic during the rally so it is possible we could run into some heavy volume selling.

Something tells me that this probably will not happen. But I hate saying that, because, at this point, I really fee like we all deserve a nice uptrend with a few stocks that can produce for us anywhere from 50% to 300% gains. It has been a long time since that August rally that lasted all but two months and I think we deserve some more HOT charts to continue to keep on producing us some nice gains.

We have been very blessed the past couple of weeks as most of the longs that we have taken in-bulk have produced us either nice large initial gains or they are still working on near-perfect bases that still look good to go. Normally, by this point in a new uptrend, I have more “near-perfect to perfect” charts showing up that have me excited for some big possible gains. But sadly we do not have a lot of charts that look like IST of 2004 and HRZ of 2006 (I am going to post this ‘past big winner’ sometime during the market session on Friday–so you newbies looking to study past recent winners can look forward to that). I am hoping that as this rally goes on mutual funds will start to put all that cash back to work and some of the nice CANSLIM stocks that have a lot of green to max green BOP can setup in a near-perfect properly formed chart patterns. If they can get to working, I can get back to making some large coin.

Right now, I am very happy where I am at. I only have 30% cash left and am working on margin at this point to maximize my gains. I still think this rally has a chance to turn into a heavy volume rally as NOW I see a lot of nice round bases all over the place in top stocks. Not only that but there are ascending bases, double bottom bases, and plenty of base on base patterns. This is very encouraging.

The only problem I have with a lot of them is that there are a lot of choppy, rough, and wild base. they are not the nice round, flat, and sound bases. However, if another base can form on top of a LOT of these chart patterns I could have some really nice base on base patterns. And my BOP scans are starting to become VERY active which shows that a lot of stocks are now under some steady systematic accumulation.

Stocks that I am long that are up enough that you would be chasing if you bought them here include GENC (up 45%) and HA (up 60%). Take a look at those two beauties on Telechart software. There are not as many of these kind of charts out there as there normally is in a raging bull market. But the way some top stocks look like EXM, JRJC, GSI, PDO, SOHU, VIT, MICC, AMED, CYBS, ISYS, TDY, CNQR, UMBF, ALV, HAS, NTES, ULTI, MPWR, KSU, HEIA, BIDU, WDR, AEHR, and BMI are just some of the stocks setting up in HOT bases that I am looking to get long. There are a LOT of other HOT charts out there but I am already long them. If these complete EVERYTHING is going to be alright.

OK I am going to finish commentary off with some important notes and a goodbye message:

-the Dollar was very strong as it rose .93% (DXY0 in TC2007) to 73.27 and the Euro fell 1% to our dollar

-oil fell to 112.52 from 120 just a week ago and the daily chart of oil completely looks like it is rolling over

-the CRB looks like a very short term double top. Two HARD drops from the highs recently

-copper had a nasty mini-crash today; commodities look like they have topped for a while

-have you seen the yield curve lately? looking great!

-Nassy acc/dis back up to an A

-the put/call rose today from .81 to .88, on a BIG UP DAY!!!!! incredible

-big cap had momo today: GOOG AAPL MA RIMM

-however energy was nasty: ARD XOM FSLR AG

-top leading sectors were building-residential/commercial, transportation-services, transportation-trucks

-rotation from commodities into emerging markets like Mexico, Colombia, China, and especially Brazil

-Brazil stocks rocked with ITU BBD leading the way

-ETF rotation out OIH UNG GLD SLV SLX XLE KOL DBA TAN

-ETF roatation in BBH XLK QQQQ XLF RTH FXI

-leading stocks leading the way higher MPWR BBD SOHU ITU MA CHRW GTI CMI KSU CTRP ABV V CEDC GMCR BABY STD

-Nasdaq led the way higher with a 2.8% gain

-volume was higher on both exchanges today

-new 52-week highs barely beat new 52-week lows 103 to 98

-the DJIA p/e ratio is a whopping 64.2

-the NYSE short interest ratio is at ANOTHER NEW ALL-TIME HIGH AT 12.56. It now will take almost 13 days of average volume to cover all the shorts, if they decide to all cover at the same time

I don’t like doing note points like this but after looking at the preview I realize it does not look that bad and this will DEFINITELY allow me to get all my points across without passing out on this computer. I am no doubt super bullish here and I do understand that we are coming up against resistance, are rallying on lower volume, and we are overbought on the short term. However, this pullback will tell us a LOT about this market. If we pullback on lighter volume and then the next move up we blast off on huge volume as mutual funds reenter the stock market.

Remember, the best growth mutual funds that I track show quite a few of them hording cash. Eventually these elephants are all going to have to unleash those funds and that buying power is going to help raise a LOT of nice stocks up into the stratosphere. Until that day comes, I will continue to go long the few HOT charts that setup in very nice proper basing patterns, as long as those stocks are showing some form of very strong growth in the EPS and sales department.

I am too tired to continue as I have surfed some 6 foot to 12 foot face waves (depending on where I went) for three days in-a-row and feel like mush. I hope I am in the chat room by 630AM HST as I would like to spend an Aloha Friday watching this market fly higher. But no matter what it does, I am ready for anything: up, down, sideways, whatever. I will see you in the chat room and forums!!! ALOOOOHA!!!

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